Inflation rose broadly in line with estimates in October, a sign that price increases may at least be stabilizing, the Department of Commerce reported Thursday.
The Federal Reserve-backed Core Personal Consumption Expenditure Price Index, excluding food and energy, rose 0.2% in a month, up 5% from a year ago. Month-to-month gains were below Dow Jones’ forecast of his 0.3%, but the year-to-year gains were steady.
The rise also represents a slowdown from September, when it was up 0.5% month-on-month and 5.2% year-on-year.
Including food and energy, headline PCE was up 0.3% on a monthly basis and 6% on an annual basis. Month-to-month increases were the same as he was in September, but year-over-year increases saw him take a step back from his 6.3% pace.
of department also reported Personal income rose 0.7% for the month, well above expectations of 0.4%, and spending rose 0.8% as expected.
In another key report, a widely followed measure of manufacturing activity hit a two-and-a-half-year low in November.
The ISM Manufacturing Index recorded a reading of 49%. This represents the level of companies reporting expansion for this period. The reading was 1.2 points lower than in October, the lowest since May 2020 early in the Covid pandemic.
Declining order backlogs and imports were the biggest drags on the index. The headline price index fell 3.6 points to 43%, suggesting lower inflation. Meanwhile, the employment index also retreated, down 1.6 points to 48.4%.
Following the morning’s data, markets were generally lower, with the Dow Jones Industrial Average dropping more than 250 points in early trading, while the S&P 500 and Nasdaq Composite suffered smaller losses.
Chris Zaccarelli, chief investment officer at the Independent Advisors Alliance, said: “This morning’s data was a Goldilocks report that showed core inflation continued to decline.” If it continues, the market will continue to rise, and investors will decide that the Fed does not need to raise interest rates as much as was previously expected, or to hold them for longer.”
The Federal Reserve employs a wide range of measures to measure inflation, but gives preference to the PCE index because it takes into account changes in consumer behavior, such as substituting cheaper goods for more expensive goods. doing. This differs from the Consumer Price Index, which is a raw measure of price changes.
Policymakers see core inflation as a more reliable indicator because food and energy prices tend to fluctuate more than other items.
In separate economic news on Thursday, the Labor Department reported: weekly unemployment claim The total was 225,000, down 16,000 from the previous week and below the estimated 235,000.
Another job report from an outplacement agency Challenger, Gray & Christmas Planned layoffs showed a 127% increase on a month-to-month basis in November and a 417% year-over-year increase. Despite the large surge, the company noted the second lowest total year-to-date layoffs in the data set through 1993.
The data comes at a pivotal time for the Fed, which is in the midst of a rate hike campaign to curb inflation.
In a speech on Wednesday, Chairman Jerome Powell said he had seen some signs that inflation had eased, but added that the central bank needed to see more consistent evidence before changing gears. But he said rate hikes could begin to taper as early as December.
“The outlook for inflation remains very uncertain,” Powell said.
PCE data showed that the numbers remained volatile. Inflation in goods rose 0.3% in a month after falling three months ago, while inflation in services rose 0.4%, rising 0.6% for the second time in a row. Economists have been exploring a return to a more services-based economy after unusual demand for commodities played a major role in 2021’s inflation spike.
Food inflation rose 0.4% and prices of energy goods and services rose 2.5%.
The Federal Reserve (Fed) is keeping a close eye on the job market, and there are further signs that inflation is easing.
The number of applications for unemployment insurance is on a slight upward trend, and the number of continuous applications increased by 57,000 to 1.61 million, the highest level since February.
